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Which Theory of Multinational Behaviour Best Explains Ranbaxy s Internationalization Activities

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Bell [1996] developed a new eclectic structure by adding resource-based theory into Hill, Hwang and Kim’ s eclectic model. Empirical studies undertaken by using the Harvard Multinational enterprise Database show that there is a positive relationship between establishing sole ventures with standard of the parent firms’ international experience, host country experience, parent firm’ s size, marketing intensity of parent firm, research  and development initiatives, asset features and assumed market capacity of the host country. Joint venture entry mode is suitable when there is a cultural gap between the host and home countries; it depends on the host country’ s welfare, government restrictions and the degree of competition in the host country.

When firms opt for research & development intensive industry, they prefer joint ventures. There are other factors, which are crucial to the success of an international venture like a host country’ s environment, market production, parent firm’ s home country, product, and resource dedication factors. Later, Kumar and Subramanian [1997] stressed the importance of endogenous factors, affecting the choice of mode of entry. Managers of MNC’ s face time and resource limits; their own opinions about the facts of the information and characteristics of the decision task also matter.

Ziang (2003) has based his study on the eclectic mode by submerging Kumar and Subramania’ s contingency model and Root's [1994] and Meckler and Dolomite's[1997] conventional model into multinational pharmaceutical firms choice of entry theory. Taking note of the international behaviour theories described above in pharmaceutical industry, Ranbaxy has acquired an Irish generics company, Rima Pharmaceuticals, now called as Ranbaxy (Ireland) Ltd. in 1996. Ranbaxy boasts of not only joint ventures with companies like Eli Lilly Ranbaxy in India and Ranbaxy Schein Pharma LLC in the US but also fully owned subsidiaries in the Netherlands, the UK, Egypt, Poland, Hong Kong and North America (Generic Outlook, 2001).

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